Tax changes affect UI employee paychecks starting February 2018
UI employees paid monthly will notice a change in their take-home pay starting Feb. 1. due to a federal tax reform bill passed in December. Bi-weekly employees will see changes in their Feb. 6 paychecks.
Employees are not required to take any extra steps regarding their taxes, but the Internal Revenue Service is encouraging taxpayers to review their withholdings and tax circumstances once it releases a new tax withholding calculator in February. University Payroll Services will post a link to the new tax withholding calculator when it becomes available.
The IRS is also revising the Form W-4 but has not given a release date. Before or after the new Form W-4 is released, individuals may wish to adjust their W-4 tax withholding and may do so through the Employee Self Service (https://login.uiowa.edu/uip/auth.page?type=web_server&client_id=hris&redirect_uri=https%3A%2F%2Fhris.uiowa.edu%2Fportal%2Findex.php&response_type=code&scope=workflow.api.hris ) website.
UI employees paying taxes in Iowa should note that state income tax applies to their taxable income after federal income taxes are withheld, and with lower federal income taxes many UI employees may have more state tax withheld as a result.
For more information on federal tax changes in 2018, go to (https://www.irs.gov/newsroom/irs-withholding-tables-frequently-asked-questions). University Payroll Services is unable to provide individuals with tax advice; concerned employees are encouraged to consult with a professional tax preparer.
Frequently Asked Questions
Q: Why are these changes being made?
A: The UI is complying with federal law. The changes in individual income taxes reflect the changes in tax rates and tax brackets, increased standard deduction, and repeal of personal exemptions that were included in the new tax reform law signed in December. The new tax withholding tables for 2018 is the first in a series of steps that the IRS will take to help improve the accuracy of federal tax withholding.
Q: How soon will people see the changes in their paychecks?
A: Employees will see withholding changes in their February paychecks. Monthly paid employees will see changes to their Feb. 1 paycheck; bi-monthly paid employees will see changes beginning with their Feb. 6 paychecks.
Q: Do employees need to take any action?
A: Tax withholding updates are made by employers and their payroll providers, so employees are not required to take any extra steps. The IRS will be releasing a new tax calculator in February to help employees ensure withholding is accurate. Taxpayers are advised to use the calculator to determine if any changes should be made in their withholding for future paychecks to avoid over or under withholding of the appropriate amount of taxes.
Q: Should employees check their withholding after the new withholding calculator is available?
A: The IRS encourages all taxpayers to check their withholding when the new information is available in February. The IRS will help educate taxpayers about the new withholding guidelines and the calculator.
Q: Am I at risk of owing taxes to the government at the end of the year? Am I under-withholding taxes on my paycheck?
A: Some individuals have more complicated tax situations and face the possibility of owing taxes at the end of next year. For example, individuals who itemize their deductions, couples with multiple jobs, or individuals with more than one job a year will be encouraged to review their tax situations. The IRS is encouraging taxpayers—particularly those with more than one income in their household—to check their withholdings. The IRS is updating the 2018 Form W-4 and the IRS.gov withholding calculator to help with this process.
For more detailed questions and responses, go to https://www.irs.gov/newsroom/irs-withholding-tables-frequently-asked-questions.
Kevin Ward, MBA, SPHR
Senior Director, Human Resource Policy & Administration
University of Iowa